This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.

Tuesday, March 31, 2015

Kentucky General Assembly Corrects Typo in Business Corporation Act – Its Only Been There Since 1988

Kentucky
General Assembly Corrects Typo in Business Corporation Act –

Its Only
Been There Since 1988

The 2015 Kentucky General Assembly, in HB 440, corrected a
typographical error that can be dated to 1988.At that time, in the course of drafting the Kentucky Business Corporation
Act, it being based upon the then existing version of the Model Business
Corporation Act, a decision was made to define the aspirational standard of a
director as including the more subjective “honestly” in place of the more
objective “reasonably.”However, even as
this change was made with respect to the aspirational standard, a similar
change was not made with respect to the standard for affording a director
indemnification; that provision continued to utilize “reasonably.”

In order to address this differential and
provide for the intended consistency between the aspirational standard and the
standard for indemnification, KRS § 271B.8-510 has been revised to delete
“reasonably,” substituting in place thereof “honestly.”